State Pension may fail millions as life expectancy rise slows

Projections from the government's Office for National Statistics suggest that the rise in life expectancy over recent years is slowing down. There are concerns the change may affect millions and leave the State Pension struggling to keep up. In mid-2020 there were 11.9m of pensionable age in the UK. This is expected to grow to 15.2m by mid-2045. The numbers represent a slowdown in longevity in comparison to previous estimates that were used for the review of State Pension Ages in 2017. State Pension age is currently 66 for men and women. Under current plans it will rise to 67 between 2026 and 2028 with a further rise to 68 between 2044 and 2046. The review of State Pension ages in 2017 was based on figures from the ONS in 2014. According to analysis of the latest figures by pension consultancy LCP, for men and women currently at pension age, their life expectancy is now two years shorter than previously thought. While the State Pension age has increased rapidly in recent years, according to LCP partner Steve Webb, this latest data reinforces the case for a fundamental rethink of the timetable for increasing state pension ages. In particular he wants the government to look again at the plan to start moving towards a universal state pension age of 67 in four years’ time. He said: “The last review of state pension ages was based on data which is now more than six years out-of-date. Since then, life expectancy at pension age for both men and women has dropped by more than two years. “Such a dramatic shift in such a short space of time calls for a fundamental rethink of the government’s plans for increases in state pension age. “With the move to 67 due to start in only four years, DWP needs to speed up its current review, as the case for rapid increases is simply not justified by the evidence." An estimated 13.6% of boys and 19% of girls born in 2020 are expected to live to at least 100 years of age, according to the latest ONS statistics. This is projected to increase to 20.9% of boys and 27% of girls born in 2045. The projections from the ONS showed that the number of over-85s is expected to double in the next 25 years. There are currently an estimated 1.7m over-85s. The ONS latest data on population trends predicts this rising to 3.1m by 2045, accounting for 4.3% of the total population. The working age population is projected to grow by a much slower rate from 42.5m in 2020 to 44.6m in 2045. The old-age-dependency ratio, the number of people of pensionable age for every 1,000 people of working age, is projected to increase from 280 in mid-2020 to 341 by mid-2045. Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said that rapidly increasing the State Pension age may no longer be the best solution to increasing longevity given the slowdown in its growth.

State Pension may fail millions as life expectancy rise slows

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